Analysts following the markets in the last year would have found it hard to miss the steep uptick of the private equity secondaries market. 20 years ago, no one had heard of secondary funds. In the last year, four out of the 10 largest fundraising were secondary funds.
The secondaries market has been enjoying accelerated growth over the last 15 years-reaching an all-time high in 2019 of $88 billion for transaction in AUM, up from $37 billion three years prior. And the numbers are impressive. Fundraising for secondaries rose from $27 billion raised in 2019 to $90 billion in 2020, including several funds independently raising an excess of $10 billion.
Whilst initial economic shocks brought on by the pandemic resulted in a market hit for the private equities secondaries market, the second half of 2020 saw an impressive rebound- the market is predicted to reach $100 billion this year. This is thought to be brought on by a number of factors, including an upward surge in public markets and fund NAVs, as well as restored market participant confidence, as people adjusted to the initial impact of the pandemic.
Whilst notable, it’s also important to address that this rapid growth parallels the rapid growth of the primary market, which has grown exponentially over the last 20 years as the size of capital behind this market increased.
In response to increased interest in the space, IQ-EQ and private equity tech platform, Moonfare, joined forces to co-host a virtual roundtable, discussing the key emerging trends we’re seeing over this high-growth period. Bringing together decades of experience in the Private Equities space, IQ-EQ and Moonfare have produced a whitepaper on the top five trends taking place in secondaries right now.
This includes; the increasingly strategic value of secondary transactions for limited partners (LPs); general partner (GP)-led investors going mainstream; transaction volumes vs pricing; increasing access to the secondaries space; and how secondaries has gone from niche to a must-have for private equity fund managers.